Tax Requirements for Airbnb Hosts in California
If you are an Airbnb host in California, you should be fully aware of any tax requirements that have been placed on the corporation’s operations. For example, if you are hosting a property in a certain part of California, you must know the transient occupancy tax rate that you are required to charge visitors. Failure to follow these regulations could lead to tax issues down the line. If you need assistance handling your tax liability as an Airbnb host, you should consult with an experienced Roseville tax attorney today. The NewPoint Law Group can help you stay up-to-date on your taxes as an Airbnb host. Our firm is here to explain the tax requirements for Airbnb hosts in California.
Transient Occupancy Tax
The transient occupancy tax is that applies to hotels, inns, motels, and more recently Airbnb lodgings. The term transient occupancy tax (TOT) is specific to California. However, there are other states that charge an occupancy tax for lodgings. It is the responsibility of the Airbnb host to charge and collect the TOT from a visitor to pay towards their taxes.
Under certain circumstances, Airbnb will enable a system to automatically collect and remit the TOT whenever you rent a room to a guest in California. The following is a list of TOT rates for counties in California where Airbnb collects the TOT automatically:
- Amador County – 10% of listing price
- Butte County – 6% of listing price
- Calaveras County – 12% of listing price
- Culver County – 14% of listing price
- El Dorado County – 10% of listing price
- Humboldt County – 10% of listing price
- Madera County – 9% of listing price
- Marin County – 10% of listing price
- Nevada County – 10% of listing price
- Plumas County – 9% of listing price
This is not an exhaustive list. There are several other counties in California where Airbnb will automate the collection of TOT taxes. The taxes collected will typically include cleaning fees and will apply to guests that stay no more than 30 nights. Additionally, each county in California is not obligated to impose a TOT. However, most counties utilize their right to collect the tax.
It is important to note that if you offer lodgings in a county where Airbnb does not complete the tax collection process, you will have to collect the taxes manually. You are also obligated to inform your guest of the exact amount of the TOT. Airbnb offers two methods to collect the TOT if you must do it manually:
- When your guest checks in
- By using the Resolution Center after your guest checks in
To learn more about Airbnb host tax requirements in California, you should speak with an experienced California tax preparation attorney.
Tax Tips for Airbnb Hosts
There are multiple tax planning tips that could be beneficial to an Airbnb host. Knowing these tips could help you manage your tax liability more efficiently. For example, as an Airbnb host, you should be aware of the 14-day rule. This rule allows you to earn rental income tax-free if you meet the following two circumstances:
- You rented your property for no longer than 14 days in a calendar year
- You use your vacation home for 14 days or more, or you use the property for 10% of the total amount of days you rented it to a guest
This rule applies whether you rent out your entire property or just a single room. You should also know that Airbnb might submit these earnings to the IRS even if they meet the 14-day rule. This means you should keep thorough records to prove that you qualify for the exception if you receive an inquiry from the Internal Revenue Service (IRS).
Remember to document all expenses that you may be able to deduct from your income. For example, if you frequently buy new towels for your guests to use, this can be used as a deduction. You should operate your rental property as a business so that you are not caught off-guard if you need to explain an issue to the IRS or a state agency.
It is also important to remember to keep track of any state or local tax regulations that apply to you. Airbnb may not be able to handle local tax regulations on your behalf.
Our California Tax Lawyers Can Help You Manage Your Tax Liability
If you or a family member require assistance in calculating taxes as an Airbnb host, you should contact an experienced Folsom tax return planning lawyer. At the NewPoint Law Group, our lawyers possess extensive experience handling a wide range of tax issues. Keeping track of complex state and federal taxes can be confusing, but we are here to streamline the process. To schedule a confidential legal consultation, call the NewPoint Law Group at 1 (800) 358-0305.